Putting a price on carbon is an essential part of any strategy to combat climate change, mitigate risks and capitalize on opportunities. Corporate use of an internal price on carbon is becoming the new normal for major multinationals, and in 2020, more than 2,000 companies were factoring an internal carbon price into their business plans, representing an 80% leap over five years. The widespread adoption of internal carbon prices illustrates the mainstreaming of climate change concerns as a line item in public companies' budgeting and strategic planning.
What are the benefits?
Carbon pricing systems encourage innovation and help ensure sustained economic competitiveness. Leading businesses already recognize this, and have disclosed to CDP that they support carbon pricing policies and are building a carbon price into their business operations and investment decisions as a way to prepare for a low-carbon economy.
What is expected of companies that make this commitment?
By making this commitment, companies are agreeing to align with the UN Global Compact’s Business Leadership Criteria on Carbon Pricing:
- Set an internal carbon price high enough to materially affect investment decisions to drive down greenhouse gas emissions;
- Publicly advocate the importance of carbon pricing through policy mechanisms that take into account country specific economies and policy contexts; and
- Communicate on progress over time on the two criteria above in public corporate reports.
Companies can communicate on progress through platforms like the CDP climate change questionnaire. Companies who successfully align with the criteria will join a growing group of Carbon Pricing Champions.
